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The China Cleantech Juggernaut

Is the China Juggernaut an inexorable force crushing the world’s industries, or is it a bleeding giant unable sustain its growth and momentum? Is China the world’s largest Superfund project, or is it a greening nation that will bring photovoltaic energy to the world at bargain prices?

These questions were examined by an expert panel gathered in Chicago on 11 January 2013 by the Midwest Energy and Sustainability Leadership Alliance (MESLA) and Northwestern University’s Initiative for Sustainability and Energy (ISEN).

Called the “Chinese Cleantech Juggernaut,” the morning-long session gathered a panel of experts in varied fields at the Deloitte office in downtown Chicago.

The speakers were:

·         Mary Gade, president Gade Environmental Group. Gade was formerly Environmental Protection Agency (EPA) Region V administrator and Director of the Illinois EPA.

·         Stephen Markscheid, non-executive director, China Ming Yang Wind Group, China Integrated Energy, Jinko Solar.

·         John Robinson, principal consultant, Cornerstone China Advisors. Chairman of the Blue Tech Alliance.

 The moderator was Mil Ovan, principal associate, Nova Associates. Ovan was formerly CEO of NextGen Solar and SVP, co-founder of Firefly Energy.

Ovan opened by showing recent newspaper headlines blaming the closing of American solar energy firms on Chinese competition. Global energy demand is expected to rise by 40 percent by 2030, Ovan said, and China will be half of that increase. During that time, Ovan added, 300 million Chinese will move to cities and the Chinese urban population will exceed 1 billion people.

Rounding out the picture is that today 80 percent of China’s electric energy comes from coal-fired power plants. China leads the world in global demand and demand growth for many resource commodities, Ovan stressed, such as power, water, food and natural resources. 

The Chinese Experience 

Gade, who is working with the Chinese government on its next five-year plan for energy, put the headlines in perspective.

She showed very similar photographs of air pollution in U.S. cities in the 1960s and Chinese cities today. The Chinese are not just “finally” getting around to doing something about their environment, she said. “It took us reaching a state very similar to China’s today before we passed the first of the Clean Air Acts and created the Environmental Protection Agency,” Gade stressed.

This call to environmental action comes at a time when China faces growth challenges that far exceed what faced the U.S. in the 1970s. By 2025 there will be 221 Chinese cities of 1 million residents or more, Gade projected. By comparison, Europe has only 35 cities of that size today.

China is serious about an improved environment. In the 10th Five-Year Plan which covered 2000 to 2005, the country spent the equivalent of $9 billion on environmental improvements. Its efforts were largely unsuccessful, with SO2 emissions growing by 30 percent. The efforts to improve the environment were outstripped by the growth in the number of industries, their increasing output and huge energy consumption, Gade stressed.

In the 11th Five-Year Plan covering 2005 to 2010, China spent $26.8 billion from the Central Budget and had another $321 billion for environment-related construction projects. Two major goals of that plan were to 10 percent reductions in both the SO2 emissions into the atmosphere and the Chemical Oxygen Demand (COD) in water. The outcome was a 14.3 percent reduction of SO2 and a 12.5 percent drop in COD emissions into the water.

The problem with the 11th Five-Year Plan was that it was not cost-effective, Gade stressed. For instance, it required SO2 controls in parts of the country where there was no SO2 problem.

In the current 12th Five-Year Plan, extending from 2010 to 2015, the budget is for $546 billion on the environment with another $241 billion for eight key environment-related construction projects. It sets goals for similar reductions in four areas, SO2, COD, ammonia-nitrogen and nitrous oxides. It also sets high standards for extension of water quality monitoring and the percentage of cities meeting Grade 2 air quality standards.

“Unlike in this country, provincial governors who did not meet the environmental goals of the 11th Five-Year plan were fired,” Gade reported. Chinese citizens took to the streets to protest against pollution.

China is the world’s second-largest economy, Gade stressed, and the world’s largest exporter and manufacturer. It has 233 million motor vehicles, with 8 million added just last year. Its population is 1.35 billion.

Future five-year plans will shift emphasis to carbon dioxide, heavy metals, particulates and ozone, Gade predicted. It will expand from key industries to all industries, including agriculture.

 The Solar Energy Arena

 “I’m not so sure about the “juggernaut” thing when so far nobody’s making any money,” Markscheid offered at the beginning of his talk.

Photovoltaic solar electrical production was invented in the 1950s, but remains an expensive way of generating electricity,” he related. That changed with the adoption of the feed-in tariff in Europe (see related article) which ramped up demand so much that China’s position in the solar photovoltaic market went from zero in 2000 to 70 percent today.

“Prices fell from $8 a watt in 2002 to $2 a watt in 2011 and 60 cents a watt today,” Markscheid said. “The solar market is very big, but for last ten years it has depended almost entirely on government support. In US we have a kind of patchwork of government incentives that tends to favor larger users of energy.”

Now Chinese clean energy companies are coming to the United States. “What's missing in China is the infrastructure to put its good university research into practice, like the relationship between Stanford [University] and Silicon Valley, Markscheid explained.

Currently China has a total renewable energy electric generation capacity of 105 gigawatts, about twice the 58 gigawatts in the U.S.


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An interesting comparison between the attitudes of the new countries appears in Markscheid’s statistics on sustainable energy and defense spending. China spends $1 on renewable energy for every $3 it spends on its defense budget. The U.S. spends $41 on the defense budget for every $1 it spends on renewable energy.

The problem is that the people who rate management in the Chinese solar industry value expanding market share over profits. Markscheid presented the following figures on the performance of leading Chinese solar energy firms.

 In China, Markscheid stressed, “Every manufacturer of solar panels wants business market share to show the government and shareholders, in priority to everything else.”

One key arena for expansion by Chinese companies is the U.S. Chinese investment in U.S. clean energy firms totaled more than $250 million in 2011, Markscheid said. From 2006 to 2011 China invested more than $200 million in clean energy in Illinois about $125 million in California.

Energy and Water


Robinson’s talk stressed the link between energy policy and water resources.

“The connection between energy and water is key to Chicago and this region,” Robinson said. “The need for fresh water Is linked with the ability to transport it.”

He noted the following links between energy and water resources:

·         It takes energy to move and treat water,

·         It takes water to generate electricity, either directly or by cooling thermal power plants.

·         Alternative energies relying on corn and soy beans require large amounts of irrigation water.

·         It takes 15,000 liters of water to produce 1 kilogram of beef.

·         Shale gas development requires large quantities of water.

·         Desalination requires substantial energy to drive water through membranes, and for other stages of operations.

Robinson extended his points with data showing that the per capita water resources of the world are concentrated in countries with relatively low population density, while the growing and urbanizing nations of China and India have far less water resources. 

Putting China is perspective, Robinson said, “Think of 1.3 billion people living in the United States east of the Mississippi.” To make matters worse he added, “Most of China’s people are in the driest region.”

In 2010 China produced 74 percent of its electric energy from thermal power plants, mostly coal-fired, and got a further 22 percent from hydroelectric power. Thus 97 percent of China’s electric generation requires large water resources. China’s energy use per capita is still rather low compared to other major nations, and is bound to grow substantially. The country intends to double its electric power generation capacity by 2030.

This leads to one of the reasons Robinson formed Cornerstone China Advisors four years ago. “Chinese companies are becoming expert at problems facing municipalities and states around the world,” he stressed.

For example, he noted that the Kaiquan Pump Group has topped its industry in worldwide sales for the past eight years, had eight subsidiary companies, owns factories in Shanghai, Zhejiang, Hebei, Liaoning and Anhui, and has a yearly production capacity of 400,000 pumps.

Anther leading Chinese company in this field is Tidelion, a leader in stormwater and flood control technology.

He also cited dozens of new cities of a million or more inhabitants that are being built in southern China to lure the urbanization trend to areas with more water and sustainable energy options. This is creating a huge marketplace for urban planning and sustainable development.

“Thanks to the sheer volume of water and energy ‘experience’, Chinese companies are becoming ‘expert’ at problems that many municipalities and companies face around the world,” Robinson concluded, noting there will be a major conference on the subject in Chicago in October 2013.


In questions for the panel, an attorney complained about China’s “culture that does not fit a common business model.” Robinson replied by noting that basketball in the U.S. is played in a court with a “key” that includes all of the free throw circle, while in Europe the key is shaped differently, a rectangle cut off at the free-throw line. “You have to get used to playing by different rules,” he said.

Gade commented by noting that many people think differing attitudes toward the rule of law is the biggest problem facing Chinese business investment. Intellectual property rights are a major issue, she said, warning, “In China you’d better not have a business plan that depends on intellectual property.”

Another questioner noted that China must find jobs for 20 million new jobs for workers every year, and the country is facing street demonstrations demanding action on the environment and other social unrest.

Robinson noted that a desalination plant employs a few people with very high skill levels, while a pipeline hires thousands of people with low skills. That demands a creative political balance in public policy.

Gade added that Chinese leaders do not want to keep doing heavy manufacturing, but hope to transition to a post-industrial economy between 2020 and 2030.